Carolina Hotels, Multifamily Can Expect Short-Term Boom After Florence
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As the busy summer season is winding down, hotel and multifamily property owners along the coastal Carolinas should brace for a new busy season: the aftermath of Hurricane Florence.
Using past hurricanes as a barometer, real estate experts are predicting an increased demand for short-term rentals after Hurricane Florence.
Newmark Knight Frank Senior Managing Director, Valuation & Advisory, Southeast Market Leader Raymond Higgins said after Hurricane Katrina, many of the apartment buildings and hotels were damaged. The ones that weren't raised their rents and experienced unusually high occupancy levels.
“It was a good time for the owners while supply and demand went their way,” he said. “It was hard on the residents.”
Higgins specializes in multifamily appraisals and said it is common to see full occupancy and higher rents from before the storm.
“There will be such a shortage of places for people to live.”
Mapping The Next 12 Months Of Demand
BDO Forensics Insurance & Recovery practice leader Clark Schweers said last year’s Hurricane Harvey can be used as a road map to predict multifamily and hotel trends in the months ahead for the Carolinas.
“There are going to be tens of thousands of people on the residential side that are going to have homes that are either underwater or significant damage. What we saw in Harvey is that the demand for temporary housing or for rental properties or for multifamily housing and hotels will skyrocket,” Schweers said. “The demand is going to far outweigh the available supply in Eastern North Carolina.”
One difference from Harvey is that this time many damaged homes are second homes. That will leave the impact to multifamily and hotel properties a little more muted compared to Harvey, where mostly primary homes were damaged, Schweers said. However, this does not include areas such as Wilmington, where most residents are year-round.
“What we do know in going through dozens of these similar scenarios, is there is going to be a massive influx of economic activity, construction activity, etc., that’s going to be occurring throughout many parts of North Carolina and northern South Carolina,” Schweers said.
Rental needs will be above average for the next six to 12 months to accommodate workers. When the workers vacate, there will be a bit of a dip, Schweers said.
Location will be important: For families whose primary homes were damaged, staying near their workplaces and children's schools will become a top priority, Breyer Home Buyers owner Shawn Breyer said.
“Property owners who focus on providing housing for three to nine months for families will see the demand increase the rent values. Even the demand for the shorter-term, weekly rentals will see an increase in demand and prices.”
Repair And Recovery Crews Replace Sun Seekers And Supply Suffers
STR, a data and analytics specialist, showed 75% of the hotel rooms available in Eastern North Carolina were sold Sept. 16-22, the week after the hurricane. That is 23% more hotel rooms rented than that same week in 2017. Revenue for the rooms was 37% higher than the same week last year.
After two weeks of independent research, STR data on Tuesday showed at least 53 property closures — almost 5,000 rooms — in the affected region.
Susan Riggs is the face behind 22 of those 5,000 rooms.
Her hotel, The Savannah Inn in Carolina Beach, North Carolina, suffered major damage, rendering all of its 22 rooms unusable. Riggs hired a disaster restoration and cleaning company, which began rebuilding efforts immediately. Her oceanfront building, which has seven rooms, will need to be brought down to its studs, Riggs said. Anywhere from 16 to 20 workers are spending time on her property, cleaning up debris and hauling it to the dump.
“It was like a convoy of these trucks coming down the street. They’ve got an army of vehicles and people.”
Repair and recovery crews, including tree removal companies, wastewater and utility line workers, roofing companies, adjusters and general contractors are filling all of the remaining rooms in the area. This is great for the functioning local business owners, Riggs said.
In fact, the team members leading the rebuild of Riggs’ own hotel themselves need places to stay. Most of them are next door, at the Dolphin Lane Motel, where owner David Bowles said only one of his rooms suffered water damage.
He said most of his 45 rooms are filled with construction and recovery workers.
“I’m worn out from doing all summer and now getting this done has worn me down for sure. But we’re very fortunate,” Bowles said. “I can’t complain. I worked 140 out of 145 days.”
“I think the restaurants have been doing pretty good around here too, with all those workers around,” Bowles said.